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DECREE

DECREE

On tontine

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 14, 2005 Civil Code;

At the proposal of the Minister of Justice,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Governing scope

This Decree provides the forms of tontine, the rights, obligations and responsibilities of tontine participants.

Article 2.- The State policies on tontine

1. The legitimate rights and interests of persons participating in tontine for the purpose of mutual assistance among people under the provisions of this Decree and other relevant legal documents are protected by law.

2. It is strictly forbidden to organize tontine to practice usury, commit swindling, trust abuse or other illegal acts in order to appropriate properties of other people.

Article 3.- Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Annuity share means a determined sum of money or another asset which, as agreed upon, a member must contribute in a tontine opening. Annuities must be the negotiable properties.

2. Tontine opening time means a time when a member receives the total annuities as agreed upon by all the members.

Article 4.- Types of tontine

Tontine covers interest-free tontine and interest-bearing tontine. Interest-bearing tontine includes interest-bidding tontine and commission tontine.

Article 5.- Tontine holder

Tontine holder means a person who organizes and manages a tontine, collects annuity shares and hands those shares to the member entitled to receive them in each tontine opening till the last one, unless otherwise agreed upon. Tontine holders must have full civil act capacity.

Article 6.- Members

Members are persons who participate in a tontine, contribute annuity shares and receive the tontine. A member may contribute one or many annuity shares for a tontine.

Article 7.- Forms of tontine agreement

Tontine agreement can be expressed verbally or in writing. Written agreements on tontine may be notarized or authenticated if so requested by members.

Article 8.- Contents of tontine agreement

Depending on each type of tontine, tontine participants may agree on the following contents: the tontine holder, number of participants, annuity share, tontine opening, annuity-contributing and -receiving procedures, rights and obligations of tontine participants, liabilities for breach of obligations, transfer of annuity shares, the withdrawal from tontine, termination of tontine and other contents.

Article 9.- Tontine books

1. The tontine holder must open and keep a tontine book. In case of absence of a tontine holder, tontine participants may authorize a member to open and keep the tontine book.

2. Depending on types of tontine, a tontine book may include the following details:

a/ Names and addresses of the tontine holder and members;

b/ The annuity share, tontine opening and annuity-contributing and -receiving procedures;

c/ The tontine money sum and other assets contributed or received as annuities;

d/ The transfer of annuity shares;

e/ The tontine withdrawal and termination;

f/ Signatures or fingerprints of tontine members when they contribute or receive annuities;

g/ Other contents relating to activities of the tontine group.

Article 10.- Interest rates

In case of interest tontine, the interest rate on annuity shares shall comply with the provisions of Article 476 of the Civil Code.

Chapter II

INTEREST-FREE TONTINE

Article 11.- Interest-free tontine

Interest-free tontine means a tontine whereby members, as agreed upon by tontine participants, receive annuities upon the tontine opening without having to pay interests to other members. The member who receives the annuities is obliged to contribute its annuity shares so that other members can receive the annuities until when the last member receives the annuities.

Article 12.- Determination of annuity-receiving order

Unless otherwise agreed upon, the annuity-receiving order in interest-free tontine is determined by drawing lots.

Article 13.- Obligations of members

1. To contribute annuity shares as agreed upon to the tontine holder, in cases tontine holders are available, or to the annuity-receiving member.

2. To pay damages to tontine participants, if causing damage due to breach of obligations.

3. To perform other duties as agreed upon.

4. In case of absence of a tontine holder, the member authorized to open and keep the tontine book has the obligations specified in Clauses 1 and 5, Article 15 of this Decree.

Article 14.- Rights of members

1. Upon the tontine opening, the annuity-receiving member is entitled to receive annuities from the tontine holder or other tontine members.

2. To protect their legitimate rights and interests if they are infringed upon.

3. To transfer their annuity shares in accordance with Articles 309 thru 317 of the Civil Code.

4. To withdraw from the tontine as agreed upon.

5. To request the tontine holder or tontine book keeper to give the tontine book to see and to supply information related to the tontine.

6. Other rights as agreed upon.

Article 15.- Obligations of the tontine holder

1. To open and keep the tontine book and papers related to the tontine.

2. To collect annuity shares of members.

3. To hand over the annuities to the annuity-receiving members.

4. To pay annuity shares on behalf of members if so agreed upon in cases when members fail to contribute their shares upon the tontine opening.

5. To let members see the tontine book and supply information related to the tontine upon request.

6. Other obligations as agreed upon.

Article 16.- Rights of the tontine holder

1. To request tontine members to contribute annuity shares.

2. To request annuity-receiving members to receive the annuities upon the tontine opening.

3. To request members who fail to contribute their annuity shares to refund the annuity shares contributed on their behalf by the tontine holder.

4. Other rights as agreed upon.

Chapter III

INTEREST-BEARING TONTINE

Article 17.- Interest-bearing tontine

Interest-bearing tontine means a tontine whereby, as agreed upon by the tontine participants, members receiving the annuities upon the tontine opening shall pay interests to other members. The members who receive the annuities are obliged to contribute their respective annuity shares so that other members can receive them until the last member receives the annuities.

Article 18.- Determination of annuity-receiving members in interest-bearing tontine

1. Unless otherwise agreed upon, the annuity-receiving member at a tontine opening is the one who offers the highest interest rate.

2. Unless otherwise agreed upon, if at a tontine opening many members offer the same highest interest rate, these members will draw lots to identify the member eligible to receive the annuities.

3. Except for the case specified in Clause 4 of this Article, members who have received the annuities may not participate in offering interest rates in subsequent tontine openings.

4. If a member contributes more than one annuity share in a tontine, he/she is entitled to offer interest rates until the number of times of annuity receipt corresponds the number of annuity shares he/she has contributed in a tontine.

Article 19.- Interest-bidding tontine

Interest-bidding tontine is a tontine whereby, as agreed upon among the tontine participants, the tontine holder receives all the annuities at a tontine opening and is not required to pay interests to other members. At other tontine openings, the member who offers the highest interest rate is entitled to the annuities and shall pay interests to other members.

Article 20.- Obligations of interest-bidding tontine members

1. To contribute annuity shares.

2. To pay interests to other members upon receipt of annuities.

3. To pay damages to tontine participants if causing damage due to breach of obligations.

4. Other obligations as agreed upon.

Article 21.- Rights of interest-bidding tontine members

1. Except for the case specified in Clause 3, Article 18 of this Decree, to offer interest rate at each tontine opening.

2. To enjoy interests from the annuity-receiving members.

3. The rights specified in Article 14 of this Decree.

Article 22.- Obligations of the interest-bidding tontine holder

The interest-bidding tontine holder has the obligations specified in Article 15 of this Decree.

Article 23.- Rights of the interest-bidding tontine holder

1. To receive the annuities at a tontine opening.

2. To request the members who fail to contribute their respective annuity shares to refund the shares paid on their behalf by the tontine holder.

3. Not to pay interests to other members.

Article 24.- Commission tontine

Commission tontine means a tontine whereby, as agreed upon among tontiners, the tontine holder has the responsibility to collect annuity shares from the tontine members and hand them to the annuity-receiving members. The annuity-receiving members must pay interests to other members and commissions to the tontine holder. The commission levels are agreed upon by the tontine participants.

Article 25.- Obligations of commission tontine members

1. To pay commissions to the tontine holder.

2. The obligations specified in Article 20 of this Decree.

Article 26.- Rights of commission tontine members

Commission tontine members have the rights specified in Article 21 of this Decree.

Article 27.- Obligations of the commission tontine holder

The commission tontine holder has the obligations specified in Article 15 of this Decree.

Article 28.- Rights of the commission tontine holder

1. To enjoy commissions from annuity-receiving members.

2. To request members to contribute annuity shares.

3. To request members who fail to contribute annuity shares to refund the annuity shares they have contributed on their behalf.

Chapter IV

LIABILITIES FOR BREACH OF OBLIGATIONS

Article 29.- Liabilities of the tontine holder for failure to hand annuities to annuity-receiving members

If the tontine holder has collected annuity shares from members but fail to hand them to annuity-receiving members, the tontine holder must, at the request of the latter, hand the collected annuities to them and pay damages, if any.

The tontine holder must pay interests on the late-handed annuities at the rate agreed upon by the parties; if no agreement is reached, the basic interest rate announced by the State Bank at the time of handing the annuities corresponding to the duration of late hand-over shall be applied.

Article 30.- Liabilities of members for failure to contribute annuity shares

1. If members fail to contribute their respective annuity shares upon the tontine opening, they must pay the outstanding annuity amounts corresponding to the duration of non-payment until the tontine termination and pay damages if any.

2. If members fail to contribute their respective annuity shares and the tontine holder has contributed them on their behalf, those members must repay the tontine holder the late annuity shares and the interests thereon. The interest rate shall be agreed upon by the parties; if no agreement is reached, the basic interest rate announced by the State Bank at the time of repayment of the annuity shares corresponding to the duration of late payment shall be applied.

Article 31.- Settlement of disputes

Disputes that arise over or from the tontine shall be settled through negotiations, conciliation or, at request of one or many tontiners, be settled at a court in accordance with the law on civil procedures.

Chapter V

IMPLEMENTATION PROVISIONS

Article 32.- Implementation effect

This Decree takes effect 15 days after its publication in "CONG BAO."